INTERNATIONAL
BUSINESS OF INDIA
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WHAT IS INTERNATIONAL BUSINESS
International business means carrying on
business activities beyond national boundaries.
These activities normally include
• transaction of economic resources
• international production
• foreign investment especially, foreign direct
investment
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NEED OF INTERNATIONAL BUSINESS
• To import the goods that are not produced
domestically
• To export the goods that are produced over and
above the domestic requirements
• To encourage foreign direct investment to build the
resource gap
• Micro-economic level importance
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INDIA AND GLOBAL TRADE
India had a significant share in the world trade at
the time of independence. However, since then
there was a regular decline in India’s share in the
world exports till 1980. From 1950 to 1980 the
percentage declined from 2 to 0.4. It, how ever
improved to about 0.8 by 1997. It reached 0.83% in
2003 and rose to 1.45% in 2008.
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THE BREAK-UP OF FOREIGN TRADE IN TERMS
OF EXPORTS & IMPORTS (RS.CRORES)
Year Export Import BOT
1995-96 106353 122678 -16325
1996-97 85623 97111 -1488
1997-98 126286 151553 -25267
1998-99 101850 132447 -25267
2002-03 255137 297206 -42067
2003-04 291582 353976 -62394
2004-05 356625 481950 -125190
2005-06 456418 660408 -203990
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EXPORTS AS A % 0F NATIONAL
INCOME
YEAR IN %
1960-61 6.8
1970-71 3.8
1980-81 5.4
1990-91 7.2
1996-97 9.6
1997-98 8.4
1998-99 8.0
1999-00 8.5
2000-01 8.8
2001-02 8.7
2002-03 9.0
2007-08 17
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EXPORT STRATEGY
• Imports will increase and to finance them , we need
higher exports earning.
• It is not advisable to depend on external assistance
to finance imports.
• Debt-servicing burden is ever mounting,
necessitating increased export earning.
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FOREIGN TRADE POLICY
(2004-09)
OBJECTIVES
(i) to double our percentage share of global
merchandize trade within 5 years
(ii) to use trade expansion as an effective instrument
of economic growth and employment generation.
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ACHIEVEMENTS OF FOREIGN TRADE
POLICY (2004-09)
Looking back, we can say with satisfaction that the UPA
Government has delivered on its promise.
In the last five years ;
• our exports witnessed robust growth to reach a level of US$
168 billion in 2008-09 from US$ 63 billion in 2003-04.
• Our share of global merchandise trade was 0.83% in 2003; it
rose to 1.45% in 2008 as per WTO estimates.
• On the employment front, studies have suggested that nearly
14 million jobs as a result of augmented exports in the last five
years.
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EXPORT BY REGION
( IN RS.CRORES)
0
50000
100000
150000
200000
250000
300000
350000
400000
Europe Africa America Asia &
ASEAN
CIS &
Baltics
Other
Region
Apr-Feb 2008
Apr-Feb 2009
Share – 52%
Growth – 29%
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IMPORT BY REGION
(IN RS.CRORES)
0
100000
200000
300000
400000
500000
600000
700000
800000
Europe Africa America Asia &
ASEANH
CIS &
Baltics
Other
Region
Apr-Feb 2008
Apr-Feb 2009
Share – 61%
Growth – 36%
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TOP FIVE COMMODITIES OF
EXPORT
0
20000
40000
60000
80000
100000
120000
Petroleum Gems &
Jewellery
Transport
Equipment
Machinery
&
Instruments
Drugs &
Chemicals
Apr-Feb 2008
Apr-Feb 2009
Growth –
87%
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TOP FIVE COMMODITIES OF
IMPORT
0
50000
100000
150000
200000
250000
300000
350000
400000
Petroleum
Products
Electronic
Goods
Machinery
except
Electronic
Gold Pearls
Apr-Feb 2008
Apr-Feb 2009
Growth – 38%
Growth – 99%
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FTP (2009 – 2014)
The short term objective of current FTP
is :
• To arrest and reverse the declining trend of exports and to
provide additional support especially to those sectors which
have been hit badly by recession.
• The government is likely to set a policy objective of achieving
an annual export growth of 15% with an annual export target
of US$ 200 billion by March 2011.
• In the remaining three years of this FTP i.e. upto 2014, the
country should be able to come back on the high export
growth path of around 25% p.a.
• By 2014, the govt. expects to double India’s exports.
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SPECIAL FOCUS INITIATIVES
With a view to continuously increasing our
percentage share of global trade and expanding
employment opportunities , 13 special focus
initiatives have been identified. Government of
India shall make concerted efforts to promote
exports in these sectors. These sectors are…
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(1) MARKET DIVERSIFICATION
• In this policy, focus is on diversification of Indian
exports to other markets, specially those located in
Latin America, Africa, parts of Asia and Oceania.
The initiatives taken under this policy are..
• 26 new countries have been included under Focus
Market Scheme.
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(2) TECHNOLOGICAL
UPGRADATION
Such initiatives include :
• EPCG Scheme at zero duty has been
introduced for certain engineering, electronic
products, plastics, handicrafts, etc.
• To encourage value added manufacture
export, a minimum 15% value addition on
imported inputs has been stipulated.
• A number of products including automobiles
have been included for incentives under Focus
Product Scheme.
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(3) SUPPORT TO STATUS HOLDERS
The Government recognized ‘Status Holders’
contribute approx. 60% of India’s goods exports. To
incentivise and encourage the status holders,
additional duty credit scrip @ 1 % of the FOB of past
export shall be granted for specified product
groups.
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(4) AGRICULTURE AND VILLAGE
INDUSTRY
• Vishesh Krishi and Gram Udyog Yojana
• Import of inputs such as pesticides are permitted
for agro exports.
• New towns of export excellence with a threshold
limit of Rs 150 crore shall be notified.
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(5) HANDLOOMS
• Specific funds are earmarked under MAI / MDA
Scheme for promoting handloom exports.
• Duty free import of old pieces of hand knotted
carpets on for re-export after repair is permitted.
• New towns of export excellence with a threshold
limit of Rs 150 crore shall be notified.
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(6) HANDICRAFTS
• Specific funds are earmarked under MAI / MDA
Scheme for promoting handicraft exports.
• New towns of export excellence with a threshold
limit of Rs 150 crore shall be notified.
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(7) GEMS AND JEWELLERY
• Import of gold of 8 k and above is allowed subject
to import being accompanied by an Assay
Certificate specifying purity, weight and alloy
content.
• Duty free import entitlement of commercial samples
shall be Rs. 300,000.
• Import of Diamonds for Certification/ Grading & re-
export by the authorized offices/agencies of
Gemological Institute of America (GIA) in India or
other approved agencies will be permitted.
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(8) LEATHER AND FOOTWEAR
• Duty free import entitlement of specified items is 3%
of FOB value of exports of leather garments during
preceding financial year.
• Re-export of unsuitable imported materials such as
raw hides & skins and wet blue leathers is permitted.
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(9) MARINE SECTOR
• Imports for technological upgradation under EPCG
in fisheries sector (except fishing trawlers, ships,
boats and other similar items) exempted from
maintaining average export obligation.
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(10) ELECTRONICS AND IT
HARDWARE MANUFACTURING
INDUSTRIES
• Expeditious clearance of approvals required from
DGFT shall be ensured.
• Exporters /Associations would be entitled to utilize
MAI & MDA Schemes for promoting Electronics and
IT Hardware Manufacturing industry exports.
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(11) SPORTS GOODS AND TOYS
• Sports goods and toys shall be treated as a
Priority sector under MDA / MAI Scheme.
• Applications relating to Sports Goods and
Toys shall be considered for fast track
clearance by DGFT.
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(12) GREEN PRODUCTS AND
TECHNOLOGIES
• India aims to become a hub for production and
export of green products and technologies. To
achieve this objective, special initiative will be
taken to promote development and manufacture
of such products and technologies for exports. To
begin with, focus would be on items relating to
transportation, solar and wind power generation
and other products.
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(13) INCENTIVES FOR EXPORTS FROM
THE NORTH EASTERN REGION
• In order to give a fillip to exports of products from
the north-eastern States, notified products of this
region would be incentivized .
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CONCLUSION
International Business plays a crucial role in the
economic development of a nation as it leads
to industrialization, employment and reduction
of scarcity of consumer goods. Our share of
world trade has significantly increased over the
years. At present, International Business
opportunity in India exists in areas like IT,
Telecom, R&D, Infrastructure, Retailing, etc.
Sectors like health, education, housing, water
resources, SMEs are untapped and offer huge
scope.
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